Summing Up The Week

As if the week didn’t have enough ahead of it with all of the earnings reports and the Fed Meeting, a little-known Chinese startup called DeepSeek kicked off the week by terrifying the entire market. DeepSeek made everyone think China had developed an open-source, Large Language Model (LLM) artificial intelligence powerful enough to compete with OpenAI’s ChatGPT at a fraction of the cost!

Which they did… sorta. Well, it’s complicated. Read on below to find out more.

Market News

“Nobody expects the Chinese AI Inquisition!”

When it comes to what news moves the stock market, the “unknown unknowns” are always what shake stocks to their core. On Sunday evening, AI tech stocks like Nvidia (NVDA) were slammed when Chinese AI startup DeepSeek released its app on the Apple app store, reported MSN. While the fact Chinese startups had been developing their own AI was widely known, what caught the markets off-guard was when DeepSeek’s chatbot performed nearly as well as OpenAI’s current version of ChatGPT at a fraction of the cost.

DeepSeek claimed its free, open-source large-language model (LLM) released in December was developed in two months at a cost of less than $6 million, however, later in the week, reports started to break that DeepSeek had illegally trained its own LLM on OpenAI’s ChatGPT. Training an LLM using another – a process called “distillation” – dramatically reduces costs, of course, as the trainee doesn’t have to carry the cost burden by using another LLM’s completed results.

DeepSeek’s newest version, r1, was launched last week and surpassed OpenAI’s newest verion in third-party tests. “While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether U.S. tech giants’ pricing power are being threatened and if their massive AI spending need re-evaluation,” IG’s market strategist Junrong Yeap said in a note.

As a result, Nvidia and other AI stocks traded down more than -5% in premarket trading Sunday evening and Monday morning.

Consumer Confidence down in January

On Tuesday, the Conference Board reported that the Consumer Confidence Index pulled back 5.4 points in January 104.1 as consumers have become uncertain about both present and future conditions, reported The Conference Board.

“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part,” said Dana M. Peterson, Chief Economist at The Conference Board in a release. “All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline. Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row. Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income. The return of pessimism about future employment prospects seen in December was confirmed in January.”

The Conference Board did mention there were positive aspects of the survey including consumers’ view of their family financial situation over the coming 6-12 months.

The Fed leaves rates unchanged, not confident about inflation

On Wednesday, the Federal Reserve announced it would leave rates unchanged to no surprise of anyone, however the Fed also provided uncertainty about whether inflation is truly dead, reported CNBC.

“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” said the Federal Reserve in its press release. “Inflation remains somewhat elevated.” The release went on to reiterate that the economy “has continued to expand at a solid pace.”

During his press conference, Fed Chair Jerome Powell said that he had no contact with President Donald Trump since Trump demanded that Powell lower rates “immediately” last week. However, following the Fed’s decision to hold rates steady, Trump railed against the Fed in his own press conference, accusing the Fed of creating inflation by failing to “stop the problem they created with inflation.”

PCE shows inflation in-line at 2.6%

On Friday, the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred gauge of inflation, reported an in-line 2.6% year-over-year increase in December as expected, reported CNBC.

Some members of the Fed even expressed optimism over the in-line reading. Chicago Fed President Austan Goolsbee told CNBC that the PCE data was “even a little better than expected.”

“I don’t make too much of any one month, but you know, I’ve been saying that I felt like we are on path to 2%,” he said during a “Squawk on the Street” interview. “I have comfort, I won’t say overconfidence, but I have comfort that we’re on that path.”

Trump doubles-down on tariffs beginning Saturday

While the markets appeared to be rallying smoothly on Friday, all of the indexes reversed after the White House announced that President Donald Trump still plans to go ahead with 25% tariffs on Mexico and Canada along with a 10% tariff against China beginning Saturday, February 1, reported CNBC.

Karoline Leavitt, the White House press secretary, said Trump will be implementing 25% tariffs on Mexico and Canada as well as a 10% duty on China, in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country.” She went on to say, ““These are promises made and promises kept by the president.”

Naturally, tariffs are a bad sign for any business, so the stock market rolled over mid-day following the news.

Next Week’s Gameplan

Next week brings more economic datapoints with manufacturing PMI and ISM manufacturing on Monday; the ADP employment report on Wednesday; and the January payroll report on Friday. There are a variety of other reports, too, including the trade deficit on Wednesday along with ISM services; U.S. productivity on Thursday; and consumer credit Friday afternoon.

Of course, earnings season is still in fully swing, too:

• On Monday, we get Get Irked holdings IDEXX Laboratories (IDXX) before the bell and buy target Palantir Technologies (PLTR) after the close. 
• On Tuesday, both Alphabet (GOOGL) and Advanced Micro Devices (AMD) report after the close. 
• On Wednesday, Disney (DIS) reports in the morning followed by Arm Holdings (ARM) and Skyworks (SWKS) solutions after the close. 
• Thursday brings us Pepsico (PEP) and Roblox (RBLX) before the market opens followed by Amazon (AMZN), Pinterest (PINS), and Take Two Interactive (TTWO) after the close. 
• Finally, Friday sees the lowly Canopy Growth Corporation (CGC) report before the market opens… but who are we really kidding there, am I right?!

 There’s no sign of slowing so make sure you join me back here next Friday to recap the week, friends!

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Crytpo Corner

Bitcoin Price Action

Come on, Bitcoin! DO SOMETHING!

Despite being a long-term investor, I absolutely love volatility, so nothing is more boring to me than when an asset – particularly an insanely volatile one like Bitcoin – settles into an incredibly dull trading range. This is where the big orange crypto has been for the past week… doing absolutely nothing.

For a moment there, it looked as though things were getting interesting when Bitcoin broke through last week’s low at $99,416.27 and didn’t find support until $97,715.03 during the “AI Panic” on Monday, but since then, well, it’s just been rangebound between that lower weekly low and a weekly high at $106,484.77 on Wednesday. Even constant news blasts of an impending Strategic Bitcoin Reserve did nothing to move the price!

The Bullish Case

Bulls are screaming at the top of their lungs about the Strategic Bitcoin Reserve, MicroStrategy’s (MSTR) new buys, and Tesla’s (TSLA) huge reported gain on its quarterly earnings report thanks to Bitcoin, but, as far as price action goes, Bitcoin has had no reaction. The Bulls argue that this is just the calm before the storm and that all of this price consolidation is leading to an explosive upside surprise.

The Bearish Case

Unsurprisingly, the Bears hold the exact opposite perspective of the Bulls. Where Bulls tout the consolidation as positive, the Bears are pointing out how all of the supposedly positive price catalysts can’t get Bitcoin to go higher. According to the Bears, this means that the next big move is lower, particularly thanks to the new lower weekly-low.

As for me? I think both camps know absolutely nothing (which is usually where I fall). I don’t think the new weekly-low is significant because there was an outside mini-Black-Swan-Event in the form of the DeepSeek AI outperforming OpenAI’s ChatGPT.

However, I also find it odd that the positive news catalysts haven’t brought in new buyers, either. Once again, I am where I often am – I’m neither bullish or bearish and will wait for the price action to show me where Bitcoin wants to move next.

Bitcoin Trade Update

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Not Your Keys, Not Your Crypto…

In light of brokerage failures in 2022, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchanges I use to execute my next few buys. I use multiple cold wallets from the brands Ledger and Trezor to hold my crypto (click the links to access the direct sites, and I receive no affiliate benefits from these links).

Additionally, I have now divided my allocated USD between two different exchanges – Gemini and Coinbase – in case one (or both) becomes insolvent. Disclaimer: We both receive a bonus if you use my Gemini referral link to open an account.

I do not trust anyone in the space, even with Coinbase (COIN) being publicly traded (and one of my own Investments in Play positions).

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.

While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (possible moves include drops of -90% or more and gains of +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are some of Bitcoin’s price movements over the past couple of years:

• In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rallied +343% to $13,868.44.
• In December, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• In March , Bitcoin crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
• Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
• Later in January 2021, Bitcoin dropped -32% to a low of $28,732.00.
• In February, Bitcoin rallied +103% to a new all-time high of $58,367.00.
• Later in February, Bitcoin dropped -26% to a low of $43,016.00.
• In April , Bitcoin rallied +51% to a new all-time high of $64,896.75.
• In June , Bitcoin crashed -56% to a low of $28,800.00.
• In November, Bitcoin rallied +140% to a new all-time high of $69,000.00.
• In November 2022, Bitcoin crashed -78% to a low of $15,460.00.
• In April 2023, Bitcoin rallied +101% to a high of $31,050.00.
• In June, Bitcoin dropped -20% to a low of $24,750.00
• In July, Bitcoin rallied +29% to a high of $31,862.21.
• In September, Bitcoin dropped -22% to a low of $24,900.00.
• In January 2024, Bitcoin rallied +97% to a high of $49,102.29.
• Later in January, Bitcoin dropped -22% to a low of $38,501.00.
• In March, Bitcoin rallied +92% to a new all-time high of $73,835.57.
• In August, Bitcoin dropped -33% to a low of $49,050.01.
• In January 2025, Bitcoin rallied +150% to a new all-time high of $109,321.90.

Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?

DISCLAIMER: Anyone considering speculating in the crypto sector should only do so with funds they are prepared to lose completely. All interested individuals should consult a professional financial adviser to see if speculation is right for them. No Get Irked contributor is a financial professional of any kind.